Financial advisory firms own by institutions may find themselves paying out millions in compensation for hundreds of thousands of customers who were charged fees for ongoing advice, when no such advice existed.
Report 499 Financial Advice: Fees for no service document reports the provision of ongoing advice by AMP, ANZ, CBA, NAB and Westpac groups, as part of its Wealth Management Project - a project examining large financial advice companies and their conduct.
ASIC said that over $23.7 million had already been paid (or agreed to be paid) in refunds and compensation to over 27,000 customers who received advice from the major banks. Further reviews are being conducted by banks and their licensees to see to what extent the fees spread. ASIC said that CBA was likely to have to pay the most, at over $100 million.
ASIC stressed that no fee for service failures had occurred since the Future of Financial Advice (FoFA) reforms, and clients were now expecting a Fee Disclosure Statement every year, with opt-in requirements now in place. Financial Planning Association of Australia (FPA) members are the first to be exempted by the FPA Code of Conduct.